Highlights

MY2016/17 rice and corn production are revised up due to favorable weather conditions. Bumper rice production is expected in MY2016/17, as a result of an anticipated full recovery in the off-season rice production. MY2015/16 rice consumption likely will be lower than expected due to the slowdown in demand for broken rice by the feed industry when sales of government rice stocks are suspended during September – December 2016.

Executive Summary

MY2016/17 rice production is revised up to 18.6 million metric tons, an increase of approximately 18 percent from MY2015/16 in anticipation of the full recovery in MY2016/17 of off-season rice due to better than expected reservoirs of water above the ideal level of 7 billion cubic meters. The government has suspended sales of its rice stocks due to avoid downward pressure on domestic rice prices. The lack of government old-crop broken rice supplies likely will result in reduced rice consumption in MY2015/16 as feed industries shift to relatively less expensive imported feed wheat which is 40 percent cheaper than new-crop broken rice.

MY2016/17 corn production is revised up to 5.2 million metric tons due to higher than expected acreage expansion and favorable weather conditions. However, feed industries still rely on imported feed wheat as demand for feed grains has outpaced domestic production, particularly for corn.

Post's forecast for wheat imports remains unchanged from the previous forecast of 3.6 million metric tons in MY2016/17, of which approximately 2 million metric tons will be feed wheat.

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2015

Jan 2016

Jan 2017

Thailand

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

10270

10643

9444

9444

9550

10083

Beginning Stocks

11899

11899

10570

11207

6170

8807

Milled Production

18750

19404

15800

15800

17000

18600

Rough Production

28409

29400

23939

23939

25758

28182

Milling Rate

6600

6600

6600

6600

6600

6600

MY Imports

300

300

300

300

250

300

TY Imports

300

300

300

300

250

300

TY Imp. from U.S.

3

0

0

0

0

0

Total Supply

30949

31603

26670

27307

23420

27707

MY Exports

9779

9796

9700

9000

9000

10000

TY Exports

9779

9796

9700

9000

9000

10000

Consumption and

10600

10600

10800

9500

11100

11500

Ending Stocks

10570

11207

6170

8807

3320

6207

Total Distribution

30949

31603

26670

27307

23420

27707

Post's forecast of MY2016/17 main-crop rice production remains unchanged from the previous forecast at 13.8 million metric tons, a slight decline from MY2015/16. This reflects an acreage reduction of main-rice crop in irrigated areas, particularly in the central plains where the RID did not supply water until August 2016 in order to save water for household consumption. However, it was too late to plant rice in many areas in the central plains due to concerns about seasonal flooding in October - November. According to the Geo-Informatics and Space Technology Development Agency (GISTDA), MY2016/17 main-crop rice cultivation in irrigated areas during May 15 – September 15, 2016 declined around 4 percent. This is in line with Post's estimate in April. The majority of rice is expected to be harvest in November and flood damage in main-crop rice production should be marginal, as the overflow of the rivers likely will recede quickly.MY2016/17 rice production is expected to increase to 18.6 million metric tons, compared to the previous forecast of 17 million metric ton, in anticipation of a full recovery of Thailand's off-season rice production. This is an 18-percent increase from MY2015/16. MY2016/17 off-season rice production is likely to increase to 4.8 million metric tons, up significantly from approximately 2 million metric tons in MY2015/16 as the government is expected to allow the Royal Irrigation Department (RID) to supply water for off-season rice planting during November 2016 – April 2017 due to better than expected reservoir levels. The RID reported on September 27, 2015, that water supplies in major reservoirs in the northern region increased to 7.6 billion cubic meters, which is well above the ideal level of 7 billion cubic meters of water that the RID normally supplies for off-season rice planting in the lower northern region and central plains. The increase in reservoir levels was the result of a normal monsoon. The Thai Meteorological Department reported that cumulative precipitation in September 2017 was 15 percent above the previous year which was unusually dry.

Rice Consumption Revised Down

MY2015/16 and MY2016/17 rice consumption is revised down to 9.5 in MY2015/16 and 11.5 million metric tons in MY2016/17, due to lower than expected consumption of non-food grade rice by the feed and ethanol industries as sales of government rice stocks have been suspended since September 2016. Presently, the prices for old-crop broken rice from government stocks are approximately 40 percent lower than new-crop broken rice. However, feed manufacturers are likely to shift to imported feed wheat, which is 30 percent cheaper than new-crop broken rice, because sales of the government old-crop rice stocks are expected to remain suspended thru December 2016.

Rice exports slide in July and August 2016

Thai rice exports declined significantly to 443,736 metric tons in July 2016, down 40 percent from the same period last year. Also, rice exports in August declined approximately 11 percent from the same period last year to 622,630 metric tons. This has slowed exports of Thai rice to 3 percent (6.1 million metric tons) during January – August 2016, compared to 5 percent (5.4 million metric tons) during January – July 2016. This reflects the tight domestic supplies of new-crop white rice due to rice planting delays which resulted in a reduction of parboiled rice exports by 50 percent in July and 20 percent in August 2016. In addition, export prices for white rice reached a record $421/MT (FOB, 5% grade) in July 2016 - the highest since November 2014.

Post's forecast for rice exports in 2016 remains unchanged at 9 million metric tons. This is an 8-percent reduction from last year's exports of 9.8 million metric tons, based on the tight supplies of new-crop rice and competition from Vietnamese and Indian rice which is 13-15 percent cheaper. Also, the government will not sell its food and non-food grade rice stocks during September – December 2016, due to the concern about downward pressure on farm-gate prices of rice during the harvest in the last quarter of 2016.

Stocks

Rice stocks are revised up to 8.8 million metric tons in MY2015/16 and 6.2 million metric tons in MY2016/17, as the government has suspended sales of food and non-food grade rice stocks. The Rice Policy and Management Committee announced it will not issue any tenders for government rice stocks during September – December 2016, due to concern about downward pressure on domestic rice prices during the harvest of new main-crop rice. Presently, the government is holding rice stocks of around 8.4 million metric tons.

During January – August 2016, the government issued rice tenders totaling approximately 9.3 million metric tons. Approximately 3.9 million metric tons were sold, of which 3.5 million metric tons were food-grade rice for domestic consumption and the export market, while 0.4 million metric tons were non-food grade rice mainly destined for the feed industry.

Policy Update

More government incentives to curb rice supplies

On September 22, 2016, the Rice Policy and Management Committee agreed to provide more incentives for farmers, farmer institutions, and rice millers/traders to stockpile rice during the peak harvest period of November and December 2016. Farmers who participate in the On-Farm Pledging Program with the Bank for Agriculture and Agricultural Cooperatives will receive immediately 1,000 baht/MT ($29/MT) in cash for storing fragrant or glutinous rice on site as opposed to in the past when they had to wait until the rice was sold on the market to receive 1,500 baht/MT ($43/MT). They will receive the final 500 baht/MT ($14/MT) when the rice is sold on the market in the following months. The target of this program is to pledge 2 million metric tons of fragrant and glutinous rice in the northeastern region. Meanwhile, millers/traders and farmer institutions who participate in the Interest-Rate Subsidy Program will receive a 4 percent interest rate subsidy (for 4-6 months of storage) - up from an earlier announced 3 percent interest rate subsidy. The target is to encourage millers/traders to stockpile 8 million metric tons of rice and farmer institutions to stockpile 2.5 million metric tons. The government expects these programs will help stabilize the farm-gate price of rice, as approximately half the bumper supplies will be kept off the market during the peak harvest period.

1.5.2 Government seeking civil liability over rice pledging program is half way

On September 23, 2016, the Legal Liability Panel ruled that the Finance Ministry should seek 35.7 billion baht ($1 billion) in compensation from former Prime Minister Yingluck Shinawatra for her mismanagement of the rice pledging program during 2011-2014, which resulted in losses totaling 581 billion baht ($16 billion). The Minister of Finance must now issue an Administrative Order to seize her assets under the civil liability law. The deadline for issuing the administrative order is February 18, 2017.

Meanwhile, on September 19, 2016, the Minister of Commerce issued an administrative order to seize assets valued at 20 billion baht ($571 million) from former Commerce Minister Boonthong Teriyapirom and five ex-ministerial officials based on a fraud charge over a specious government-to-government agreement with China for the sale of 6.2 million metric tons of rice from government stocks from September 8, 2011 – February 22, 2013. The rice was reportedly resold domestically to traders/exporters and millers instead of exported to China. However, all of the accused are expected to appeal the administrative order with the Administrative Court. Their assets will not be seized until the court makes its final ruling.

1.5.3 Rice acreage reduction program underway

Policy Update

More government incentives to curb rice supplies

On September 22, 2016, the Rice Policy and Management Committee agreed to provide more incentives for farmers, farmer institutions, and rice millers/traders to stockpile rice during the peak harvest period of November and December 2016. Farmers who participate in the On-Farm Pledging Program with the Bank for Agriculture and Agricultural Cooperatives will receive immediately 1,000 baht/MT ($29/MT) in cash for storing fragrant or glutinous rice on site as opposed to in the past when they had to wait until the rice was sold on the market to receive 1,500 baht/MT ($43/MT). They will receive the final 500 baht/MT ($14/MT) when the rice is sold on the market in the following months. The target of this program is to pledge 2 million metric tons of fragrant and glutinous rice in the northeastern region. Meanwhile, millers/traders and farmer institutions who participate in the Interest-Rate Subsidy Program will receive a 4 percent interest rate subsidy (for 4-6 months of storage) - up from an earlier announced 3 percent interest rate subsidy. The target is to encourage millers/traders to stockpile 8 million metric tons of rice and farmer institutions to stockpile 2.5 million metric tons. The government expects these programs will help stabilize the farm-gate price of rice, as approximately half the bumper supplies will be kept off the market during the peak harvest period.

Government seeking civil liability over rice pledging program is half way

On September 23, 2016, the Legal Liability Panel ruled that the Finance Ministry should seek 35.7 billion baht ($1 billion) in compensation from former Prime Minister Yingluck Shinawatra for her mismanagement of the rice pledging program during 2011-2014, which resulted in losses totaling 581 billion baht ($16 billion). The Minister of Finance must now issue an Administrative Order to seize her assets under the civil liability law. The deadline for issuing the administrative order is February 18, 2017.

Meanwhile, on September 19, 2016, the Minister of Commerce issued an administrative order to seize assets valued at 20 billion baht ($571 million) from former Commerce Minister Boonthong Teriyapirom and five ex-ministerial officials based on a fraud charge over a specious government-to-government agreement with China for the sale of 6.2 million metric tons of rice from government stocks from September 8, 2011 – February 22, 2013. The rice was reportedly resold domestically to traders/exporters and millers instead of exported to China. However, all of the accused are expected to appeal the administrative order with the Administrative Court. Their assets will not be seized until the court makes its final ruling.

Rice acreage reduction program underway

The Ministry of Agriculture and Cooperatives' Department of Agricultural Extension reported on

Thailand's Corn Production, Supply and Demand

Corn2014/20152015/20162016/2017
Market BeginJul 2014Jul 2015Jul 2016
Year
ThailandUSDANewUSDANewUSDANew
OfficialPostOfficialPostOfficialPost
Area Harvested110011001090109011201168
Beginning Stocks144144139139172172
Production480048004700470049005200
MY Imports600600600600600600
TY Imports600600600600600600
TY Imp. From US5100000
Total Supply554455445439543956725972
MY Exports305305367367200300
TY Exports247247450310200300
Feed and Residual500050004800480052505450
FSI100100100100100100
Total510051004900490053505550
Ending Stocks139139172172122122
Total dist.554455445439543956725972